Soft market expected to hurt French insurers’ profits in 2017

French insurers are expected to face intense pricing competition which in turn will lead to lower profits in 2017, according to a Fitch Ratings report.

Fitch continues to maintain a negative outlook for the French insurance market.

The continuing soft market is anticipated to weaken French non-life insurers’ earnings amid signs of increasing claims activity.

For French life insurers in particular, Fitch believes low interest rates will constrain profitability.

The non-life insurers face intense pricing pressure, both in motor and non-motor lines.

The ratings agency expects a combined ratio of 102 percent for the market in 2016 and 2017, assuming a normalised level of weather-related claims in 2017.

French life insurers are expected by Fitch to only marginally cut crediting rates – below 2 percent on average – in 2017 as they strive to maintain business volumes and competitive expense ratios.

Fitch believes the cut will not be sufficient to counteract the drag on earnings from low interest rates, however.